HMRC rule means 2 million pensioners could have Winter Fuel payment 'recovered'

The payments will be worth up to £300 and will begin to be paid from later this winter

Around two million pensioners could have to pay back their Winter Fuel Payment after the government changed the rules on who is eligible for one this year.

In total, nine million pensioners in England and Wales will receive the payment from the Department Work and Pensions (DWP) this winter, Chancellor Rachel Reeves has announced.

Under the new changes, everyone over the State Pension age in England and Wales with an income of, or below, £35,000 a year will get the Winter Fuel Payment.

Pensioners will be paid automatically with those who earn above the £35,000 threshold having the payment 'recovered' by HMRC. The payment will be automatically collected via PAYE, or via their Self-Assessment return.

The government estimates that this will apply to around 2 million pensioners who are above the £35,000 threshold.

The government explained: "No pensioner will need to take any action as they will automatically receive the payment this winter, and for those with incomes above the threshold it will be automatically recovered via HMRC."

An option to 'opt out' of getting the payment in the first place will also be available, with details of how to opt out to be confirmed at a later date, the government said.

Announcing the changes today, the government said it had “listened to people’s concerns” about the Winter Fuel Payment.

It comes after the government decided to limit the DWP payment to only those who claimed Pension Credit. It was one of Labour’s first acts in Government and was aimed at balancing what was described as a £22 billion “black hole” in the public finances.

This meant the number of pensioners receiving the payment was reduced by around 10 million, from 11.4 million to 1.5 million.

Now, after the u-turn, the vast majority of pensioners who previously received it will now get the payment automatically.

To be eligible for the Winter Fuel Payment, a person will need to have reached state pension age by the week starting September 15 this year.

Sir Keir Starmer announced there would be a partial U-turn on the policy in May, after it was thought to have contributed to Labour’s drubbing in the local elections.

The Treasury claims the new arrangement will cost £1.25 billion in England and Wales, while means-testing winter fuel will save the taxpayer £450 million.

Chancellor Rachel Reeves said: “Targeting winter fuel payments was a tough decision but the right decision because of the inheritance we had been left by the previous government.

“It is also right that we continue to means test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.

“But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.

“This will mean over three-quarters of pensioners receiving the payment in England and Wales later this winter.”

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Kemi Badenoch, Leader of the Opposition, claimed the Prime Minister had “scrambled to clear up a mess of his own making”.

The Conservative leader added: “I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.

“This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The Prime Minister should now apologise for his terrible judgment.”

Liberal Democrat Leader Sir Ed Davey said: “Finally the Chancellor has listened to the Liberal Democrats and the tireless campaigners in realising how disastrous this policy was, but the misery it has caused cannot be overstated.

“Countless pensioners were forced to choose between heating and eating all whilst the Government buried its head in the sand for months on end, ignoring those who were really suffering.

“We will now study the detail of this proposal closely to make sure those who need support actually get that support. The pain they went through this winter cannot be for nothing.”